Introduction to Dividend Reinvestment

Dividend reinvestment is a systematic method of accumulating shares of a stock that pays a dividend. With a dividend reinvestment program you automatically purchase shares each time that you receive a dividend. Over many years shares add up and increase your returns without laying out new money.

Because you pay taxes on dividends, consider putting dividend reinvestment stocks in a retirement account so you can shelter the dividends from your current tax liability.

Setting up Your Dividend Reinvestment Account

Here are six ways to reinvest dividends:

Always inquire about the fees associated with reinvesting dividends because some plans charge hefty fees. Remember that any fee, no matter the amount, reduces your returns.

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